I am in a bit of a hurry right now so a copy of a PM I sent someone the other day
There are three types of hack for the 360, the first two can be done on any system but JTAG needs one that has not been updated since August 11th 2009 or built after mid June 2009.
You will probably end up pulling the 360 apart so
http://www.llamma.com/xbox360/repair/Xbox-...Disassembly.htm and you can do a video search as well as I.
With the exception of some of the hard drive stuff (specifically the DLC stuff like borderlands addon disc) each of these can (consider anything you get as lucky) see you banned from xbox live.
Each of them gets quite complex when they get going but for a rough overview
1) Hard drive mods- good for the odd bit of DLC and not much more. You can also make your own hard drive if you find a specific model.
There is the so called profile sharing hack to allow XBLA and DLC but I do not like it.
Provided you can read the hard drive (via something like the xport 360 or MS' own transfer kit or by pulling it apart and wiring it up to your machine (standard laptop sata)) then you can do this (xplorer360 is the program of choice). You might also be able to use the new USB functions and XTAF as well to similar effect. This is as close as you will get to a softmod.
2) DVD drive mods- can play any DVD game (might have an issue in the next month or so with a new check but that has been fixed already and is awaiting a release). Some of the new drives might see you pulling the drive apart and using extra hardware but read up first.
A tutorial
http://www.jungleflasher.net/downloads.html
3) JTAG aka SMC hack- you lose xbox live (system link over the internet with other, even normal, 360s is still possible) but any DLC and any XBLA can be used, you can install to hard drive without the need for a DVD to be present, run things from USB and much much more (trainers, cheats, hacks, control remapping).
Guide:
https://docs.google.com/View?id=dnfmv5h_30dw33vpf4
Note it does not allow you to play copied DVDs but you can simply read of the DVD keys and build you own firmware from it rather than having to dump the keys from the DVD drive (not that hard on most JTAG hackable systems but if something is easier why not go for it).
There are a handful of other minor hacks (disc swapping hacks and the like) but you can ignore them.
